So, we go down to the federal courthouse. It's not exactly David and Goliath, but it might be David and Pariah. We're talking about Faneuil on the witness stand, testifying against Martha Stewart. What a nasty picture he paints of this woman.

ANDY SERWER, "FORTUNE" EDITOR-AT-LARGE: He did, and some of the e-mails were incredible. The language, was very animated. It's -- the line where he said, it sounded like a "lion talking underwater." This kind of reminds me of Kato Kaelin in the O.J. trial, I mean, this kid might end up being famous after this thing, for all we know.

SUSAN LISOVICZ, CNN CORRESPONDENT: Well you know, it's interesting because he first testified on Wednesday afternoon. I happened to be down at the U.S. Courthouse, there were dozens of cameras staked out.

CAFFERTY: You weren't on trial too, were you?

LISOVICZ: I was not.

CAFFERTY: OK.

LISOVICZ: What I did was I crossed the street to another federal courtroom in a case far more serious, far more charges, far more complex, far more money, the Adelphia case... SERWER: Oh, yeah. Very interesting.

LISOVICZ: ...where a company actually went bankrupt. Guess what? That courtroom was empty. And that trial will begin later this month. So, white collar corruption, it's not limited to Martha. She's dominated the headlines but...

SERWER: You know we're having a lot of fun with this, but this is -- we're getting to crunch time here, and Martha Stewart is actually looking in -- jail in the face here. I mean, she could really go to jail.

CAFFERTY: And, I suppose she could still make deal, but if she doesn't and if she's convicted, there's no parole, it's federal sentencing guidelines, the judge says," here's the sentence. You do the time of it, every day."

SERWER: That's it. Yeah.

CAFFERTY: All right. Presidential campaign runs or passion, sort of, but realistically it lives or dies on cold, hard cash. For some of the democrats aiming for the White House, the money's getting a little scarce. They're up against George W. Bush who's drawing on a war chest that is fat, happy, and ready to go to war.

For a look at who's burning it on the democratic side and who's pinching pennies, we're joined by CNN Louise Schiavone from Washington, D.C.

Louise, already this early, before they even have a nominee, we've got candidates saying that they're not going to pay some of their staff, cutting back on little bennies here and there on the campaign trail. Who's got enough money to see this thing out and who's in trouble?

LOUISE SCHIAVONE, CNN CORRESPONDENT: Well, it's a very expensive proposition. With the race now, in its shake out period, it'll take millions of dollars for operations, travel, fund-raising and advertising for the democratic president's candidates to stay competitive.

(BEGIN VIDEO CLIP)

LARRY NOBLE, CENTER FOR RESPONSIVE POLITICS: What they're doing is, they're fighting, in a sense, for their political life, at this point. They're fighting for campaign oxygen, which is money, and they need enough money to get some wins.

(END VIDEO CLIP)

SCHIAVONE: So, how much money do the leading candidates have to spend going forward? The answer is a calculation based on has they've raised and has they've spent so far, all of which changes daily.

Jack, the most solid figures are from the Federal Election Commission as of the fourth quarter of last year. Well, keep in mind, a lot has happened since December 31. So, what we have is: In the driver's seat with big, early wins is John Kerry. He raised $25.2 million last year and five million so far this year. That FEC report showed him with 1.6 million cash on hand, heading into Iowa and New Hampshire. Now, owing to his win at South Carolina, his top showing in Oklahoma and a strong performance in Iowa, John Edwards has raised $20 million by mid-January, and $1.6 million since Iowa, at year's end the FEC showed him with about $275,000 cash on hand.

Competing for the win in Oklahoma against Edwards and with no other win, Wesley Clark raised 13.8 million last year and at least two million this year. Clark had 3.4 million cash on hand going into Iowa.

And, with the most resources and no wins, Howard Dean, who would raise more than $41 million with 9.6 million cash on hand, as the year began. This year, so far, Dean has raised over $3 million. Dean front-loaded the year with about $10 million in campaign advertising, a gamble which not only didn't pay off, but which leaves him in an undesirable fund-raising position, now.

(BEGIN VIDEO CLIP)

JERRY DELLA FEMINA, DELL FEMINA ROTHSCHILD JEARY ADVERTISING: If you're a winner, you raise money for television commercials. If you're a loser, you're out, because people are not going to spend money for your losing commercial.

(END VIDEO CLIP)

SCHIAVONE: Way ahead of the democrats with no primary opponent and the benefit of incumbency is President Bush, of course, who's raised about $130 million and still has roughly $100 million left -- Jack.

CAFFERTY: Wow. Louise Schiavone in Washington, Thank you.

I guess you could boil that whole thing down to a bumper sticker. Money talks and something else walks.

Just raising money won't keep the average political campaign on the road. A candidate has to be smart about how they spend it, as well. For a look at where the dollars you donate wind up going we're going to talk now with Frank Donatelli, from Washington. He was a political director under former President Reagan and today works as a senior vice president for McGuire Woods, a public affairs consulting firm.

Welcome, nice to you have with us.

FRANK DONATELLI, FMR. REAGAN POLITICAL DIRECTOR: Thank you very much.

CAFFERTY: Which is more important: How you spend the money or how much money you have to spend? I think I know the answer and I ask it with the idea in mind that there's $120 million war chest waiting for whoever emerges as the democratic nominee. Seems to me that'll a tough row to hoe no matter how they spend their money on democratic side.

DONATELLI: Right. Well, 100 and -- I'd say it'll probably higher than $120 million, but on the democratic side, we saw, in the case of Governor Dean, that he raised an unprecedented amount of money, over $40 million...

CAFFERTY: Right.

DONATELLI: ...and yet, virtually all of it was spent after the first two contests.

CAFFERTY: What happened there?

DONATELLI: So, that wasn't very good money management.

CAFFERTY: Was he -- was he betting on getting a early momentum by dumping all of that money into Iowa and New Hampshire, and to what degree is a candidate really committing suicide by risking making a miscalculation of that size?

DONATELLI: Jack, that's exactly what he was after. President -- first President Bush called it the "big mo" and Senator Kerry has it now. Howard Dean wanted to do what John Kerry has done. He wanted to win big in Iowa, he wanted to win New Hampshire, and he felt, and there was a lot of reason to hope for this, that he would be on his way. What happened was that governor -- or Senator Kerry, in a brilliant tactical maneuver, moved ahead of him, became the alternative to Dean in Iowa when he imploded and so he's the one that's on his way.

LISOVICZ: OK, so we've talked about Governor Dean. What about some of the people who've consistently run far in the back of the race? Like Dennis Kucinich and Reverend Al Sharpton, I mean they're still running. How is it possible that they can still run? Do they have any money?

DONATELLI: No. But, these guys -- but, you know, these guys live off the land. I mean, really what money does Al Sharpton and Dennis Kucinich need? They go to all the debates, and they show up at forums and they do a lot of television and that's basically their campaign. But, if you're going to be a serious player to the way Kerry is and probably Edwards and Clark are right now and the way Dean was, you do need to raise a lot of money, but as Jack said earlier, you need to be a little smarter on how you spend it.

SERWER: Well Frank, I think Dennis Kucinich is a serious candidate, at least to some people, out there. I think a lot of people would be surprised that the money they donate actually goes to balloons and pizza and that sort of thing, to keep the troops motivated, and keep everyone all happy and excited. How is this whole racket changing over the past 20 years? You've been an observer of this.

DONATELLI: Yeah. Well, I think, probably what we've seen this year is not only has the process been front-loaded, but the spending has been front-loaded, also. And most of the spending that we see that goes into, especially Iowa, is for organization. These are volunteers, come in to the state, and they have to be housed and fed, and the candidates do their best to put them in private homes and so forth, but it still costs a lot of money to bring organizers into a state and have them go door to door and be able to keep track of them, and so forth and so on. That's really where Howard Dean spent all of his money. Unfortunately for him, as we saw, he really didn't get a lot of return for it. But, all the campaigns now front-loaded their expenditures. There really isn't anybody out there with a lot of money, right now, so all the campaigns are running on fumes.

CAFFERTY: Fair criticism of the system that money's just too big a factor, 125, $150 million strategically placed in the nation's biggest media markets, the kind of staff you can hire for that. I mean you can co-op a lot of competition if you got a big enough wallet. Is that the way the system is supposed to work?

DONATELLI: Yeah. Well Jack, you know, I think the better way to look at is that money follows popularity, not the other way around. It's hard to find an example of a candidate who raised a lot of money, but didn't have some popular support to go along with it that. I do think of former Governor John Connelly that ran in 1980 on the republican side, spent a lot of money, didn't have a lot of popular support. But, more often than not, it's the popular support that generates the money. I don't really know what other system we would have, I would think federal funding on the primary campaigns would be a horrible thing. I think the system that we have now, where you have some sort of a match that would demonstrate some sort of popular support is probably the right thing.

LISOVICZ: Hey Frank, when do we get down to a two-man race?

DONATELLI: Well, I think we're probably there right now, but clearly after Tennessee and Virginia, this week, where one would assume that either only Clark or Edwards will survive, they would probably become the alternative to Senator Kerry, but a very pale alternative. I mean, Kerry is on his way and, I think, is really on his way, right now.

Frank Donatelli, a senior vice president of McGuire Woods Consulting. Thanks for joining us today.

DONATELLI: Thanks.

LISOVICZ: There's much more to come on IN THE MONEY. Up next, your tax dollars at work. President Bush wants to spend big in his latest budget. See how that could affect his shot at a second term.

And later, talent spotting: Business powerhouse, Jack Welch, reviews the democratic presidential candidates. Find out if one looks like a born leader.

Plus, fire your financial adviser: The planners think you need a golden nest egg to retire these days. We'll hear from a journalist who says you can live well on less. Thank goodness.

(COMMERCIAL BREAK)

LISOVICZ: President Bush rolled out his new budget this week calling for $2.4 trillion in spending. That's the kind of number that gets fiscal conservatives foaming at the mouth and makes democrats drool. Not least because the deficit is already so huge you could toss in a few hundred million and not hear it hit bottom. For a look at the Bush budget and its political consequences, we're joined from Washington by Sam Collender, who is a budget analyst and the former editor-in-chief of the fud -- "Federal Budget Report."

Boy, you have to have your eyeglasses on when you look at numbers that huge and that long. Welcome.

SAM COLLENDER, BUDGET ANALYST: Thank you.

LISOVICZ: The president, in his state of the union address, called for fiscal restraint -- to exercise spending restraint, and then you have this unprecedented budget deficit. How can you jive those two things together in an election year? Is there anyone who will like that?

COLLENDER: Well remember, the president's definition of fiscal restraint is everything other than defense, homeland security, social security and Medicare. So, he's looking at a very small part of the budget, it's what we call discretionary domestic programs or the stuff they have to appropriate every year, and that's being held at least in his budget to about a one percent -- little less than one percent increase, but you get so few savings that it has virtually no impact on the deficit at all.

SERWER: Stan, my understanding is that there's a camp inside the White House, perhaps Dick Cheney is a member of that camp, that believes deficits really don't matter. And they would say perhaps on the margin a little bit, and I think they might suggest that if they're such a big deal, how come interest rates haven't gone up? That we grow out of these things. Where do you come off on that?

COLLENDER: Well, first of all, let's quote the vice president correctly. In the book about Paul O'Neill that Ron Suskind recently, he's quoted as saying that Reagan proved that deficits don't matter.

SERWER: OK.

COLLENDER: And then at Davos, Switzerland, several weeks ago he said, "Oh, no. I agree that they do."

But, the better part of your question is exactly right. Which is, who really cares about this and why? Yes, interest rates have not risen as quickly as people anticipate currently, because interest rates are not simply dependent on the amount of government borrowing, it also has to do with the strength of the economy and a variety of other factors. But, even Alan Greenspan says over the long term, that is beyond next year -- beyond the election, if the government continues to run these types of deficits, interest rates will be higher than they would otherwise be, and that's the problem. That is at exactly the point, when the government should withdraw from the credit markets because the private sector needs to be able to have access to this capital, the government may very well be borrowing everything it can get its hands on and then some, and that's when interest rates will start to rise.

CAFFERTY: Let's talk about the politics of this document -- this budget document a little bit. The -- the deficits being what they are, and as you just mentioned, the cap on discretionary spending having a less than dramatic impact on those ongoing deficits. The only real answer is either to roll back the tax cuts or to do that and raise taxes. The democrats, in one form or another, who are trying to get the nomination, are talking about doing a combination of those things. Come November, as a practical matter, are voters inclined to vote to raise their own taxes and to reduce their take-home pay even more than it is now?

COLLENDER: Well, it depends how much they're concerned about the deficit and its impact and there are polls show that there's rising concern about that, but you know, let me -- regardless of what the democratic candidates may be saying now, and I'm not sure they're all speaking with that kind of unanimity, whatever the candidates are saying now, whatever the president is saying now, they will likely be looking at a very different economic picture after the election, that is when the next term or the next president starts, whoever that might be, in just the same way that Bill Clinton decided to started reducing the deficits when he took office compared to what he had talked about. George Bush talked about something very different. I don't think the average American is going to want their taxes increased. On the other hand I'm not sure the average Americans wants spending that they benefit from cut either and that's the political problem here, which is how do you pay for both and reduce the deficit at the same time?

LISOVICZ: It would be nice if that was possible, that's for sure. But, can we talk about the worst case scenario of running a huge deficit over the long term? It really doesn't affect us so much in the worse case scenario, it's really our children. That's where, perhaps, the social services could dry up?

COLLENDER: Well look, I'm one of those people who's not really concerned about social security benefits not being paid. All of the political power is going towards those who will be getting social security. They'll be more of them, they'll have the voting strength and I'm sure whatever congress is in place at that time will do whatever is necessary to assure them, but the real problem for our children and grandchildren, and some of the younger people probably watching today, is not so much social security, but education, environment, healthcare, maybe even defense. Keep in mind in 1985 when Graham Redman went into place because of the deficit, the biggest area of the budget that was cut was defense, not the domestic part. We're already seeing the deficit have an effect. The president's plans for Mars are basically being laughed at because no one thinks we can afford it, and a lot of spending that aid to state and local government, including law enforcement and first providers during -- you know, terrorism problems is also being cut back because of the deficit. So, this is having an effect now, not just in the future.

CAFFERTY: Stan, we're going to have to leave it there. I appreciate you joining us on the broadcast, today. Thank you.

COLLENDER: My pleasure.

CAFFERTY: Still ahead on IN THE MONEY: Problem child. Viacom's the parent company of CBS. The network in a big pot of trouble over that eye-catching halftime show at the Super Bowl. We're going to take a look at why a wardrobe malfunction may mean to Viacom stock.

Plus, corner office chops for oval office candidates: Former GE titan, Jack Welch, will join us to talk about whether there's a democrat who has what it takes to lead America.

And, hold the Ramen noodles: We'll hear from an author who says you don't have to live poor if you're retiring without a fortune.

Stay with us.

(COMMERCIAL BREAK)

SERWER: Could any company catch more flak than Viacom's caught over the past couple of days? Well, the owner of CBS and MTV was the target of lots of anger after the Super Bowl and singer Janet Jackson's "wardrobe malfunction." And, the company also took a hit when the street learned that the powerful media investment firm, Capital Research, had cut its stake in Viacom by one-half since 2002. But, the company's widely held class "B" shares are in relatively strong shape compared to its media competitors, Disney and CNN's parent company, Time Warner. That would make Viacom our stock of the week.

You know, the Super Bowl wasn't all bad.

LISOVICZ: Great show.

SERWER: First of all, the P.R. was just absolutely out of this world.

CAFFERTY: Sure.

SERWER: It was a great game and the ratings were fantastic, so I'm not shedding too many tears for Mr. Redstone and Mr. Karmazin, who you know.

LISOVICZ: And, I don't think any analysts say that this is a long-term drag on the stock, which should be mentioned, the stock is way off it's all-time high in the 70s, trading in the 40s -- low 40s, now. But, you have to remember, one of the things that this media company has, people like Mel Karmazin who's a hawk on the stock price, Les Moonves of CBS, Sherry Lansing of Paramount, Tom Freston of MTV has really deep management talent, who's been there a long time and you cannot say that with some of these other big media conglomerates.

CAFFERTY: Well, I'm not sure how talented the management is, when you hire MTV which...

LISOVICZ: Which one of their companies? CAFFERTY: ...which sells sex to 15-year-olds, I mean, that's what they do, but they're a cable channel. When you hire MTV to produce the halftime show of the most widely watched and generally accepted family viewing event in this country, the Super Bowl. I mean, how talented is the management when -- I mean, it wasn't just Janet Jackson, that whole thing.

SERWER: Well...

CAFFERTY: You had some clown with a hole in the American flag walking around.

SERWER: Who knows if you were the target audience.

CAFFERTY: You got some idiot grabbing at his crouch like he's got some sort of STD.

SERWER: A lot of people kind of like that.

CAFFERTY: How talented...

SERWER: Kid Rock, he was out there with a poncho looking great...

CAFFERTY: How talented is the management to intentionally offend people by allowing that kind of garbage to...

SERWER: The only people who were offended, Jack....

CAFFERTY: Like Roseanne Barr singing the "National Anthem" and then spitting on the ground,

(CROSSTALK)

CAFFERTY: I think it was a terrible mistake for CBS and for Viacom.

LISOVICZ: Well, you know what?

SERWER: They're trying to put all their properties together, because they've go MTV, VH1, and they've got CBS, they've got Nickelodeon, I think they've done a really good job of doing that and this is synergy, baby, it's synergy and you love it or not.

LISOVICZ: Good news for you is that Fox gets the next Super Bowl and they've been looking at Andre Costellano (PH).

CAFFERTY: There you go. You know, I heard a funny idea, well maybe it's not so funny, but somebody saying, AOL bought the halftime show.

SERWER: Right.

CAFFERTY: If AOL asked for their money back, there was a suggestion that CBS might make Janet Jackson and that kid that sang with her, what's his name? Justin Timberlake? SERWER: Justin Timberlake.

CAFFERTY: Make them refund the money, about seven-and-a-half million bucks. Interesting idea.

SERWER: You'd like it if Yo-Yo Ma did halftime.

CAFFERTY: Yeah. More ahead on IN THE MONEY. Yeah, I loved the kid with the tearing a hole in the flag and putting it over his head, that's a lot of class. Right?

SERWER: That's a poncho! It's a poncho.

CAFFERTY: That's the flag, partner.

SERWER: All right.

CAFFERTY: The grit beneath the glitz: Find out how a business legend rates the democratic presidential candidates on leadership. We're talking about Jack Welch.

And later, how to get retired without getting tired: A segment I, personally am looking forward to with a great deal of interest, And, we'll hear from a business journalist who says you don't have to burn yourself out to earn enough money to get out of the rate race.

Back after this.

(COMMERCIAL BREAK)

(NEWSBREAK)

CAFFERTY: Running the United States is probably not all that different from running a really large multinational corporation. The president of the United States has more nuclear missiles then the average corporate CEO, but they both manage people and money and foreign relations. They deal with nasty competitors, they are worrying about the marketplace.

Jack Welch knows about corporate leadership. And although he says he is backing George Bush, he has done some research and done a little work on spotting a potential leader among the Democratic presidential candidates.

Mr. Welch is the former chairman and CEO of General Electric. He's a former boss of mine, when I worked at NBC. He now works as a consultant to the CEOs of the Fortune 500 companies. And it's nice to have you with us. Welcome.

CAFFERTY: John kerry has the big mo and is the odds-on favorite to wind up with the nomination. Based on the way you would assess them from your view in the corner office of a place like GE, is he the right choice? WELCH: He's going to be the choice, so I don't think it makes much sense to do a lot of second-guessing. I wrote a piece two or three weeks ago where I thought it was a closer race and tried to articulate what each should do. But I think this game is over.

CAFFERTY: Why? Why is it over so quickly?

WELCH: Well, they ran out of money. Look, as a Republican, I wish they didn't catch on to Dean that early. You know that was a -- that was a very bad break.

CAFFERTY: Was it that thing in Iowa? Did that really...

WELCH: No I think it was before that. I think "Newsweek" did a piece before that. Other people have done some pieces before that. I think, without question, they spotted him before.

LISOVICZ: But, you know, you boiled it down to something easy to remember, the four Es. GE companies, they run on this efficiency model, the Sigma 6. For electing a viable candidate, it's the four Es. One of them being energy.

WELCH: But I think it's one to look at. But I think in a presidential campaign I -- I think likability is a big issue. So, you have to be energized.

LISOVICZ: You have to have edge.

WELCH: Edge. But the voters have to feel you. I think John Edwards has does a nice job, because he knows how to reach juries and he can get out and do...

SERWER: No, no, he is a great campaigner. I wanted to ask you, getting back to Kerry, though, what do you think he's got? Assess him for us.

WELCH: I think he has lots of energy. I still think his edge is going to be questioned now. The more I have gone into his record one position, another position, you -- you might not like what Bush does, but you know where he is. And Kerry's flip-flopps on so many issues are going to cause -- both sides are going to have a clear-cut race. There's a list of what Bush has done, whether you like it or not, and there's 20 years of Kerry. And it's not going to be a question of -- of, excuse me Jack.

CAFFERTY: No, I'm curious about your thoughts. You said you are backing President Bush. Things have changed in the last couple of months for President Bush. He was the odds-on favorite in every poll you looked at to beat any of the Democratic candidates. All of a sudden that's not the case anymore.

Kerry for two weeks running in "Newsweek," in a hypothetical matchup would beat the incumbent president. David Kay says he does not think there are weapons of mass destruction. George Tenet says we never called Iraq an imminent threat. The economy is not producing the jobs that have been lost here in the last two or three years. The deficits are a concern to people. There are issues that seem to be piling up at the oval office door and suddenly the president is on the defensive a little bit.

WELCH: Michael Dukakis left the Democratic convention 18 points ahead and lost in 1988, OK? Once you had the president hunkered down in the White House saying nothing, and the Democrats have had their say, and had their party, this happens every time. And we'll have to see where it goes.

Now, I could come back and go at each one of those things you said. David Kay, if you read what he says, versus how they report it, he said clearly he would have made the same call.

If you go to the economy, we had a meager jump this morning, we had 112,000 jobs, but the economy is very, very strong. What are some other things you rattled off?

CAFFERTY: Well, the deficits. The Democrats are saying they're going to have to either roll back the tax cuts or raise taxes. The deficits are projected to go through the ceiling as far out as the eye can see.

WELCH: More and more Democrats are going to realize a good economy helps deficits. Mike Bloomberg in New York, as we all know, a year ago was dying over deficits. And he was doing all kinds of things. Along comes a good market, better bonuses on Wall Street, better revenues, and he announces three weeks ago, hey, guys, we got a surplus.

Now, that continually is going happen. This is not a killing deficit. It's a large number, but we have $10.5 trillion economy. We can handle this. If we didn't not use our fire power this time, when would you use it? We had a real recession, and unemployment today is 5.6 percent.

CAFFERTY: Yes.

WELCH: 5.6. Andy, you have been around, that's a low number.

CAFFERTY: That's pretty good.

LISOVICZ: But job creation is the problem. And a lot of economists say that the job creation needs to be triple for the economy to be on a more solid ground.

WELCH: Well, you know, there's all kinds of arguments on that. There's the household number, there's the payroll number. More and more people are self employed. They don't show up in that number. I don't believe that if unemployment, as -- employment gains as weak as they say they are, I just don't believe it, and yet the consumer confidence index at the highest levels I've seen in years.

So, if people feel this good, some number is wrong. Either consumer confidence number is wrong, or the employment number is wrong. You know -- those statistics, I just don't buy into. LISOVICZ: Can we talk about your own economics? Because there are headlines lately about your post retirement book, which apparently was trumped by none other than Donald. But $4 million for a how-to book is not a bad deal, is it.

WELCH: You know, it's what the market would pay. I don't know if it's a good deal or not.

SERWER: You believe in the free market system, I take it.

CAFFERTY: Maybe it's the co-author.

WELCH: I think may be the co-author.

SERWER: You were saying she was the one with the brains any way.

WELCH: No question.

CAFFERTY: How about writing a book with your fiancee and still have a wedding day planned.

WELCH: Oh, no, no, we've written op-ed pieces together -- it's the best deal in the world. I think somebody said you take all the credit and she does the work. It's a hell of a deal.

LISOVICZ: Do you recommend it long-term though?

WELCH: Absolutely.

LISOVICZ: You do.

WELCH: Absolutely. We have more fun doing this than you can imagine.

LISOVICZ: When are you going to get married?

WELCH: In April.

LISOVICZ: Are we invited?

WELCH: You're all invited.

CAFFERTY: Appreciate very much having been on the program. You add a touch of class to the joint.

WELCH: Thanks a lot. You're very nice to say that.

CAFFERTY: It's true.

SERWER: Yes, it's great to see you Jack.

Former CEO Jack Welch, and author I should mention as well.

LISOVICZ: Prolific author.

SEWER: All right. Just ahead, if you think -- if you don't think you had enough saved for your retirement you may be too pessimistic. We will talk to the author of "Retire With Less."

And critics say sometimes the candidates can sometimes stretch the truth. So why not have fun stretching the candidates. Allen Wastler will have the the fun site of the week in just a few minutes. Stay tuned.

(COMMERCIAL BREAK)

SERWER: Seems like yesterday that the only retirement worry most people had was finding the right beach to build their house on. Of course things change, now more and more people are concerned about not being able to retire.

Not to worry, our next guest has tips on getting to your golden years on budget. He is Fred Brock, author on retire on less than you think. welcome.

FRED BROCK, AUTHOR: Fine. A pleasure to be here.

SERWER: Good. So, we all don't have to live on cat food later on in life. Tell us a little bit about your game plan here.

BROCK: Well, the book that I have written, "Retire On Less Than You Think," actually takes issue with the mutual fund industry's contention that you need 70 to 80 percent of your preretirement income in order to retire comfortably. And I just think that's unreasonable. And I look at a number of cases, a number of examples that demonstrate that.

What people ought to be looking at is not income but their expenses. And preretirement expenses are much greater than post retirement expenses. When people retire, a lot of expenses drop. They probably have a house paid for. There's no more work-related expenses. If they are willing to move to a cheaper part of the country, it's even better.

Imagine somebody in San Francisco, where the median price of a house is about $434,000, selling that house and moving to Tucson, Arizona, where the median price is $120,000. If the first house is paid for, or mostly paid for, suddenly you can buy a house free and clear, have a nest egg leftover, your expenses go down. You've given yourself a huge raise.

LISOVICZ: Fred, all that makes sense. Let's not forget about the early bird specials, my parents are big on that. But, you know, one thing that you have'nt mentioned is the fact that healthcare rises. It is beating inflation by a long shot and that's something that, you know, retired people typically have a need for on a more regular basis. What about that?

BROCK: Well that's true. Healthcare is a big problem. There's a chapter in my book that deals with that. Only about a third of companies provide healthcare to their retirees. The rest of the people, many people, are on their own.

There are ways to deal with that. You may have to use some of your savings to pay for healthcare until you are eligible for Social Security. Now, you can have Cobra from your employer that continues for 18 months after you leave your job, and then after Cobra is expired you can switch to a federal program called Hippa, which guarantees coverage in whatever state you live in. You just have to pay for it, it's a bit expensive.

There are some ways to cut the expenses. One way is to have a high deductible policy. If you have enough money to cover the small stuff, have a policy that just pays for big things.

CAFFERTY: How is the retirement landscape likely to change in this country as the baby boomers begin leaving the workplace? There are dramatic changes ahead. I'm not sure anybody has an exact handle on what they're going to look like, but change is coming. What do you see happening when this huge wave of babyboomers retire?

BROCK: There are extraordinary changing coming. For one thing, the baby boomers are changing the face of retirement. They're not going to retire like their parents. The idea of being retired equals being on vacation all year long is out.

The boomers will want to continue working. They will want to deal with hobbies, deal with things they always wanted to do but on their own terms. Things that perhaps they were interested in, but couldn't do during their careers because they did not make enough money.

Also, the boomers, surveys show the boomers are more and more willing to move in retirement. The boomers don't have enough money saved. They have not been good savers like their parents, they have been spenders. They have been spectacular consumers. They have -- they have a lot of debt.

When they retire, they are facing -- they will face reality and many of them will move from the high-cost coastal cities like New York, San Francisco, Boston, Washington, and so forth. They will move to less-expensive parts of country. Surveys show that clearly.

It used to be when you did a study on retirement, the question was do you want to move when you retire? 80 percent of the people said no. The boomers now, more than half say yes, I'm willing to move.

CAFFERTY: All right, makes sense, particularly if it's a question as you mentioned, of moving to a place from San Francisco where housing costs are high to a place like Omaha, where housing costs are low. The problem is you wake up and you are in Omaha. That's another program, we'll talk about some other time. Fred, nice to see you.

BROCK: Thank you.

CAFFERTY: Fred Brock, editor at "The New York Times." Author of "Retire On Less Than You Think."

Coming up, webmaster Allen Wastler -- I'm just kidding if you are watching in Omaha. Webmaster Allen Wastler will join us on a report of spam, and the fun site of the week. A lighter look at the face of American politics.

And you can send your ideas, compliments, psychological problems, addictions, recovery programs or whatever else might be right at the front of your consciousness to us via e-mail, inthemoney@cnn.com.

(COMMERCIAL BREAK)

CAFFERTY: President Bush signed the anti-spam law into December. Since then you have not been getting junk mail or e-mail or spam, right? Our webmaster, Allen Wastler, joins us now to explain why it's not working. Boy, is it not working.

ALLEN WASTLER, MONEY.COM: I would be willing to bet you are probably getting more spam now than you used to.

SERWER: Now, that's effective.

WASTLER: All right. And actually an outfight called Bright Mail did a little measuring thing, and they figured out that it increased from December 2003 to January 2004, with that law smack dab in the middle, it increased by 2 percent.

CAFFERTY: Remember all the posturing of politicians, we're going to pass a law, by god, we're going to take care of this spam problem. Isn't it nice the government is out there to help us?

WASTLER: Now, let's give the government a break, it takes a while to implement all the facets of the law and there's some built in. But there's a big criticism that the approach they took is not really the right way to do it.

Now, Europe has a tougher law. And this is where it gets interesting, OK. Europe has the tougher law. We have kind of a weak law, and now it's becoming a trade issue because in Europe, okay, they got a tougher law but they still have a spam problem, OK. Worldwide 60 percent of the e-mail you get is spam. In Europe it's 53 percent. Guess where 80 percent of their spam comes from?

CAFFERTY: Right here.

WASTLER: Right here in the United States of America.

LISOVICZ: Is it true it's the biggest U.S. export, even bigger than the film and entertainment industry?

SERWER: That's why it's a good thing. I like spam. Some of it's fun to read.

CAFFERTY: It's the only mail Andy gets.

SERWER: That's true.

WASTLER: The thing is, a lot of people have the notion it's people in China, people doing this. It's not. The companies are actually...

SERWER: It's Canadian pharmacies. That's what it is. You know what I'm talking about.

WASTLER: If you look at this list, these lists are the top spam countries. We are top in the list. Why? Well, because we got the softer law, so, you know, they can spam people over in Europe and the spammers can go ha.

CAFFERTY: They can go how?

WASTLER: It is more economical here. We have better telecom systems if you are going to honk out spam...

SERWER: Is that the verb, you honk it out?

CAFFERTY: That's that computer talk.

LISOVICZ: Is it true that spam will be extinct in two years?

WASTLER: He is saying that. He's got a three-pronged approach. The first two, I think are kind of, you know, it's kind of cute techno stuff. The third one is an idea I have been sort of expousing for a couple years, yet about it's stamps. E-mail stamps. If it's an economic problem, charge people for it, the cost structure changes..

CAFFERTY: There you go. Fun site of the week.

WASTLER: You've been talking about the candidates, right?

CAFFERTY: Yes.

WASTLER: And now we hit the point where they start stretching things and twisting issues. I have a place where you can do it yourself. There is old Kerry. The Botox so worn out there. Oh, sorry, Kerry. Howard Dean, don't you wish he didn't repress so much.

WASTLER: And of course we have the incumbent. Uh oh, the nose is growing.

CAFFERTY: That's cruel. But that's -- what fun would it be if it wasn't. Thank you, Allen. Allen Wastler.' Just ahead, as we continue, your answers to our question of the week. And remember, you can send us your thoughts, ideas, criticisms to us at inthemoney@cnn.com.

But first, Susan has today's edition of "Money and Family."

(BEGIN VIDEOTAPE)

LISOVICZ: If you are thinking of renovating your home, remember that 90 percent of renovation plans go overbudget. So here are a few tips to help you avoid the money pitfalls of home improvement.

(voice-over): First, be sure to research the costs before you start. "Remodeling" magazine is a good source for finding out the average cost of your renovation in your area. Check out their Web site at remodelingmagazine.com.

Next, you will need to find contractors who are legitimately licensed and carry liability insurance. A good online source for this is handimanonline.com. When you interview the candidates, insist on seeing work they have done for somebody else. This will give you a good idea of the quality of their work.

Once you've hired a contractor, ask for a work schedule in advance. It's important to assign one family member to talk to the contractor during the project. Not a site supervisor. Be sure to monitor the work by setting up in person or telephone meetings.

And whatever you do, do not let your payments get ahead of their work. I'm Susan Lisovicz for "Money and Family.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

CAFFERTY: Time now to check your answers to our question about how much you learn from the presidential candidates from television. Marie wrote this, "I don't learn much from the mainstream media. I watch the debates on C-Span, but the other networks spend too much time on polls and talking about who should stay in and get out of the race."

SERWER: C-Span!

CAFFERTY: And we got this letter from Florida, "I don't get much information I need from TV. I need to know who the candidates are, how they made their money and their voting records. We hardly see that kind of report."

Adrian wrote this, "how can you learn anything about the candidates from TV? They change their opinions with every new poll, my eyes glaze over. And I run to the Food Network."

LISOVICZ: OK.

CAFFERTY: Time now for our e-mail question for this week, "what will it take for you to retire at 65?" Send us your answers to inthemoney@cnn.com. We will read and commiserate with you, next week at this very same time and same station.

You also should check our show page at money.com/inthemoney. That's where you will find more show information and the highly sought after fun site of the week address. This week you can distort the appearances of candidates running for the nation's highest office. Keeping this program on a very high plain.

Thank you for joining us for this edition of IN THE MONEY. Thanks to the regular gang, CNN financial correspondent, Susan Lisovicz, "Fortune" magazine editor at large, Andy Serwer and money.com managing editor, Allen Wastler.

Join us next week, Saturday at 1:00, Sunday at 3:00. Or, if you wish, you can watch Andy and me all week long on "AMERICAN MORNING" here at CNN. It begins at 7:00 Eastern time. We would welcome you to have a little cup of coffee with us at that time.

Until then, enjoy the weekend.

END

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